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Is the lot owner responsible for damage caused by their tenant?


18 Apr 2023

Question: A tenant caused $4000 damage to common property. They’ve been sent the bill but refuse to pay. Can we claim the money from the landlord lot owner?

 

A tenant caused damage to common property. They were sent a $4000 invoice to pay for repair of the damage but they ignored the bill. What action can the owners corporation take to recover the cost of the repairs?

What responsibility does the lot owner have for the debt incurred by his tenant? The tenant regularly ignores by-laws and notices to comply, so a solicitor’s letter is unlikely to have any effect.

 

Answer: For owners corporation matters relating to a tenant, all correspondence should be sent directly to the owner and their designated real estate agent.

 

For owners corporation matters relating to a resident who is renting (a tenant), all correspondence should be sent directly to the owner and their designated real estate agent (unless the owner self manages the tenancy).

The strata manager, on behalf of the OC should address the invoice and notice to comply to the property manager and owner. It’s their duty to assure their tenant/s follow the strata by-laws. Under the NSW Residential Tenancies Act 2010 No 42, the property manager can withhold the tenant’s rental bond until the issue is resolved.

Meanwhile, the OC should check whether there’s a cost recovery by-law in place. A cost recovery by-law normally specifies that the OC can recover the cost from the lot owner or occupier for the cost incurred in repairing the damage to the common property. The OC may also recover the cost from the lot owner for the expenses incurred by their tenant if no such by-law is in place. Therefore, all OCs should consider adopting and registering a cost recovery by-law to effectively manage situations like this.

If the damage caused by the tenant was accidental, and depending on the type and severity of the damage, the OC may be able to make an insurance claim under the building insurance policy. If successful, the OC may have a by-law in place to authorise the OC to recover the insurance claim excess fee from the at fault owner / tenant.

For continual breach of by-laws by the tenant after serving notice to comply, the OC can authorise the strata manager to apply to NCAT and register for a certified money order as a last resort for any outstanding cost recovery.
 

Eddie Parada
Australian Strata Management
E: eparada@deewhy.asmstrata.com.au
P: 02 940 155 05